“Rule of Law” is both a play on my name, and a statement of my values. The rule of law is a foundation for both our liberties and for order. The rule of law respects us as equals. It allows us to organize our lives, plan our futures, and resolve disputes in a rational way. There are those around the world and throughout history who have fought in great struggles for the rule of law. My role is more modest. I am a lawyer at the law firm of Sabey Rule LLP who works with people, assisting them with estate planning, probate and estate administration. I also assist people in resolving disputes about wills and estates. In this blog, I write about some of the legal topics that I deal with in my law practice, and about other legal issues that interest me. In doing so, I hope that I help others learn more about law, and that I encourage discussion about law and law reform. I hope that, in some small way, I help nurture the rule of law. You may contact me at my office at #201 - 401 Glenmore Rd., Kelowna, B.C., Canada; V1V 1Z6; telephone number: (250) 762-6111; email: s.rule@sabeyrule.ca.

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Wednesday, February 01, 2006

Cooke v. Miller (Estate)

I have written before about the problem of determining who is entitled to the proceeds of a joint bank account on the death of the owner who contributed all of the funds. In many cases, there is a presumption that the surviving joint account owner holds the funds in trust for the deceased's estate. This is so even where the banking documents allow the survivor to take the funds. This is called a resulting trust, and I wrote about this in more detail here.

The presumption that the surviving joint account owner is holding the funds in trust for the deceased contributor’s estate can be rebutted by evidence that the contributor intended to make a gift of the account to the surviving account holder at the time the joint account was opened.

There may also be a different presumption, known as a presumption of advancement, where the joint account holders are related in certain ways. Historically, when a legal spouse contributed funds into a joint account with his or her spouse, there was a presumption that the contributing spouse intended a gift. This presumption also applied where a father, and probably a mother, contributed funds to a joint account with a child.

I have some doubt about whether the presumption of advancement still applies in British Columbia to the case of a parent contributing funds to a joint bank account with a child. There are certainly cases where the courts have found that a parent intended to make a gift to the child of the proceeds of a joint account, but in these decisions the courts have generally found evidence that the parent intended a gift—and have not relied on the presumption of advancement.

In Cooke v. Miller (Estate),2005 BCCA 263, the British Columbia Court of Appeal upheld the summary trial judge’s decision that Mr. Cooke intended to make a gift of two bank accounts owned jointly with one of his children, Barbara Miller, to her. In that case, Mr. Cooke converted his bank account into a joint account with Ms. Miller in 1994. The following year, he transferred his house into a joint tenancy with Ms. Miller. In 1998, Mr. Cooke made a will, leaving his estate to all six of his children in equal shares. Before his death, Mr. Cooke’s house was sold, and the proceeds went into a joint account with Ms. Miller. When he died, Mr. Cooke’s joint accounts had about $80,000 in them. His remaining net estate was worth about $4,000. The other five children argued that Mr. Cooke put Ms. Miller’s name on the account as a matter of convenience, and did not intend an immediate gift.

The Court of Appeal deferred to the trial judge’s finding of fact that Mr. Cooke intended a gift to his daughter Ms. Miller. The finding was based primarily on the evidence of the lawyer who drew Mr. Cooke’s will. Madam Justice Saunders in the Court of Appeal wrote at paragraph 14,

The solicitor's affidavit does not contain phrases attributed to Mr. Cooke. However, it does contain a description of the solicitor's careful practice, which includes advising clients of the immediate interest in property a volunteer acquires upon the creation of a joint tenancy. The affidavit also contains an averment of the instructions the solicitor took from Mr. Cooke to the effect that he intended a gift to Ms. Miller. That affidavit evidence of subsequent conduct can be used against Mr. Cooke to establish that he intended to make a gift to Ms. Miller immediately: Shephard v. Cartwright, [1955] A.C. 431 (H.L.). The solicitor's evidence, along with the evidence of Mr. Cooke's regular contact with Ms. Miller and his lack of contact with all but one of the appellants (including unhappy past dealings with one son) supports the evidence of Ms. Miller that her father told her "he was giving me those assets". As a body of evidence, it is sufficient, in my view, to support the finding of fact that Mr. Cooke intended an inter vivos gift. The circumstances of this case are distinguishable, therefore, from those in Re Mailman and Niles v. Lake, wherein the gift was sought to be established on the primary basis of a bank's standard form for the creation of a joint account, and without evidence of the donor's wishes as related to others.

What I find most interesting about the case is the trial judge’s ambivalence about the presumption of advancement. As quoted in the Court of Appeal reasons for judgement, the trial judge said:

[22] While recent British Columbia cases do indeed continue to support the application of the presumption of advancement in this province, (Oliver Estate v. Walker; Pasco v. Pasco; Clarke v. Hambly), it is clear that the principle - that is, the presumption of advancement - continues to be the subject of critical commentary by the courts as to whether or not in present social conditions this presumption ought to remain applicable. I am referring, in particular, to the comments made by Justice Dickson in Rathwell v. Rathwell, reported at [1978] 83 DLR (3d) 289, and the judgment of Justice Lambert of our own Court of Appeal, albeit by way of obiter, in Simpson v. Ziprick (CA019578, May 1, 1995).[23] On a review of these authorities, I am satisfied that even if there is some remaining question as to the existence of such a presumption, it is of little relevance to the case at bar.

Madam Justice Saunders wrote at paragraph 19, “In any case, the notion of presumption of advancement is at most an evidentiary tool. It is an exception, in certain situations, to a presumption of resulting trust.”

If the presumption of advancement still applies in the case of a parent and child relationship, I think it is a weak presumption. I question whether it makes sense to apply it in a case where the competing beneficiaries of the estate are also the deceased’s children. In Cooke v. Miller (Estate), it is clear that neither the Supreme Court of British Columbia nor the Court of Appeal relied on the presumption of advancement.

[Since I wrote this post, the Supreme Court of Canada has held that the presumption of advancement applies to transfers from parents to minor children, but that it does not apply to transfers from parents to adult children. See my post discussing the Supreme Court of Canada decisions on this issue here.]

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Rule of Law web-log is intended for general educational purposes only, and you may not rely on its contents for legal advice. Please keep in mind that the laws of British Columbia are often different from the laws of other Provinces of Canada, States of the United States of America, and other countries. Furthermore, the law changes, and what was once an accurate statement of the law, may now be outdated and inaccurate. If you have a specific legal problem or issue, please consult a lawyer who is familiar with the laws of your province, state or country. Neither reading this blog, nor sending me an unsolicited email will create a solicitor and client relationship with me.